ITR Filing: What Intimation Under Section 143 (1) Means For You?

The Income Tax Department carries out preliminary assessments of all the Income-Tax Returns filed by the taxpayers. This preliminary assessment is done under Section 143 (1) of the Income Tax Act, 1961. This intimation is nothing but a comparison between the details provided by the taxpayers and the calculation done by the assessing officer. It is completely a computerised and automatic process which is done by the Centralised Processing Center (CPC), Bengaluru, without any human intervention. According to Income Tax rules, the intimation under section 143 (1) has to be sent to the taxpayer within one year from the end of the financial year in which the income tax return is filed.

“For instance, if you have filed an income tax return for FY 2018-19 in July 2019, the intimation under section 143 (1) can be sent to you any time till March 31, 2021,” Said Archit Gupta, Founder & CEO, ClearTax. Gupta goes on to explain that if you did not receive any intimation within the specified period, it simply means that there are no adjustments made to the return filed by you and the department has accepted the figures reported by you.

Any communication from the Income Tax Department may worry any taxpayer. But, intimation under section 143 (1) is not a communication to worry about. Once you receive such intimation, verify details like name, PAN, address, acknowledgement number, assessment year and so on to ensure that the document belongs to your income tax return itself.

According to Rahul Singh, Manager, Taxmann.com, Section 143(1) intimation is the process to validate the return filed by the taxpayer. The process includes validation of any arithmetical errors, tax calculation, income validation and verification of tax payment. After such processing, the result of such preliminary assessment is sent to the taxpayer and is called intimation under Section 143 (1). Different types of Intimation under Section 143 (1) of Income Tax Act 1961 are as follows:

Intimation with no demand or no refund

This intimation is sent when the return filed by the taxpayer is accepted as it is without carrying out any kind of adjustment by CPC.

Intimation determining demand

This intimation is sent when any discrepancy is found in the return and tax liability has been computed by the CPC. This usually happens when taxpayer failed to report all his incomes in the return or has claimed excess TDS credit which is not reflected in Form 26AS.

Intimation determining refund

This intimation is sent when the tax amount is refunded to the taxpayer. This may happen under two scenarios: One, when tax refund is claimed by the taxpayer and after processing of return, the same is accepted. The second scenario is when no refund has been claimed by the taxpayer but on account of adjustment made during processing of return, a tax refund becomes due to the taxpayer.

Example

Rahul Singh of Taxmann explains.  Say Mr. A has professional income of Rs. 6,00,000 and interest income from fixed deposit of Rs. 55,000. Bank has deducted tax at source (TDS) of Rs 5,500 at 10 per cent on interest income. Suppose Mr. A furnished ITR and declared only professional income. He duly paid taxes on such professional income but didn’t declare interest income on which tax was deducted by the bank.

Now during the processing of ITR, CPC will include the interest income in the total income of Mr A and also give TDS credit of Rs 5,500. For the remaining tax payable by Mr A, the CPC will send an intimation determining demand for tax to him.